Interest margins are expected to fall in the long run for
Chinese banks as China liberalises interest rates that guarantee
a fat spread between the rate banks pay depositors, and the rate
they lend at.

AgBank's rise in net interest margins in the first quarter
to 2.96 percent from 2.79 percent at the end of last year likely
reflects tight credit conditions at that time, where banks had
additional bargaining power with borrowers.

Net profit for the quarter rose to 53.4 billion yuan ($8.55
billion) from 47.0 billion yuan in the same 2013 period, the
bank said in its unaudited financial statement.

That compares with an average estimate of 46.59 billion
yuan, calculated from a Thomson Reuters poll of eight analysts.

Net interest income was 103.1 billion yuan in the first
quarter, an on-year increase of 15.5 percent while gains in net
fees and commissions hit 26.9 billion yuan, a rise of 3.4
percent from the same period last year.

The bank's net interest margin was 2.96 percent at the end
of the first quarter, up from 2.79 percent at the end last year.

AgBank is the second of the four biggest Chinese lenders to
report first quarter earnings. Bank of China
on Thursday beat market expectations in reporting a
rise in net profits for the period of 13.9
percent.

Last month AgBank reported its slowest full-year net profit
growth on record in 2013 as it bolstered provisions against an
anticipated increase in bad loans.

AgBank's non-performing loan ratio remained flat at 1.22 at
end-March compared to 1.22 percent at end-December.

The bank's shares closed down 1.23 percent in Hong Kong on
Friday, ahead of the results announcement.
($1 = 6.2489 Chinese Yuan)
(Reporting by Shanghai Newsroom and Gabriel Wildau, and by
Lawrence White in HONG KONG; Editing by Miral Fahmy)